Q2 2025 Permian Resources Corp Earnings Call

Good morning and welcome to Permian resources conference call to discuss. Its second quarter 2025 earnings. Today's call is being recorded. A replay of the call will be accessible until August 21 2025 by dialing 888660 6264 and entering the replay access code 92721.

Company's website at www.permanenttsb.ie.

At this time, I will turn the call over to haste. Mabry Permian resources, vice president of investor relations.

For some opening remarks, please go ahead, sir.

Thanks John.

And thank you all for joining us.

On the call today.

Hickey, and James Walter.

Our chief executive officer.

And Guy Alvin our Chief Financial Officer.

I would like to note that many of the comments during this call are forward-looking statements.

That involve risk and uncertainties.

That could affect our actual results or plans.

Many of these risks are beyond our control.

And our discussed in more detail in the risk factors and the forward-looking statements sections of our filings with the SEC.

although we believe the expectations expressed,

Or based on reasonable assumptions. They are not guarantees a future performance.

An actual results May differ materially.

We may also refer to non-gaap financial measures.

For any non-gaap measure. We use a Reconciliation to the nearest corresponding Gap. Measure can be found in our earnings release or presentation.

With that, I will turn the call over to will hickey. Co-ceo, thanks Hayes. We are excited to discuss our second quarter results this morning, the operations team delivered are 11th consecutive quarter of solid operational execution in Q2 that included the fastest well drilled the most drilled feet per day and the lowest completion cost per foot in company history.

This execution combined with continued strong, well results support us raising our full-year production guidance, while delivering a lower capex. Guidance than originally announced in February.

Q2 is also a very volatile quarter that presented an opportunity for us to demonstrate our downturn playbook.

In April, we opportunistically executed our buyback program, with repurchases of 43 million of shares at an average price of 1052 per share.

And then in may we signed the approximately 600 million Apache acquisition at lower than mid-cycle commodity prices.

This acquisition is the exact type of deal. We like to do with meaningful overlap, with our existing assets, strong free, cash flow and inventory that competes for Capital immediately.

we closed the acquisition approximately 6 weeks ago, and are even more excited about our ability to optimize operations and and the acreage position

These types of counter-cyclical investments are exactly what we want to do to be able to deliver leading shareholder returns throughout the cycle.

And we've done. So while maintaining leverage of approximately 1 time and liquidity of approximately 3 billion

after executing on all aspects of our downturn Playbook and taking advantage of recent Market volatility, we are still in a prime position to pursue further investment opportunities to create long-term shareholder value.

Moving to Q2 reporting details production exceeded expectations. With oil production of 176.5 thousand barrels of oil per day which includes approximately 900 barrels of oil per day from the Apache acquisition, which is in line with our prior messaging.

Total production for the quarter was 385,000 barrels of oil equivalent per day.

results were driven by strong well performance from both our base Wells and recent pops, which resulted in an adjusted operating cash flow of 817 million in adjusted free, cash flow of 312 million

The 505 million of cash capex.

Additionally, our ground game machine continues to fire on all cylinders as we added 1300 net. Acres across 130 different Grassroots Acquisitions, and Q2 to build additional interest ahead of near-term development.

These opportunities remain. Some of the highest returning investments in our portfolio and are a core piece of the pr story to maximize the value of our assets.

That I'll turn it over to James. Thanks, will turn the slide 5, our strong balance sheet is what gives us the confidence to prudently invest Capital across all Cycles in our business. This has been a key part of our business model for the last 10 years and remain a core part of our strategy going forward.

1 of our primary goals has always been to achieve investment grade status, and we are thrilled to announce that we have received our first investment grade rating from Fitch. We are proud that Fitch recognized, our strong credit metrics, and track record of operating with the financial strategy, consistent with an investment grade company and would expect the other rating agencies to reflect investment. Grade status in the near term.

And we generate significant precaution going forward. The beauty of the pr business today is we don't have to choose between debt repayment, Acquisitions BuyBacks or building cash. We can execute on all of these as soon as opportunities present themselves. This provides the ultimate flexibility to efficiently, allocate capital and drive value for shareholders.

Turning to slide 6, we want to spend some time. Discussing our permanent resources is approaching the marketing of our hydrocarbons.

Giving our rapid growth, we have historically focused our Midstream and marketing efforts on Flo insurance and low fees and we've been extremely effective at ensuring all of our hydrocarbons and get to Market with zero interruptions over the past 10 years.

But as our business has grown to the scale of this today, it has become apparent that our marketing strategy needs to evolve.

Over the past 12 months, we've built out the full Midstream and marketing team in Midland that has made great progress. Selling more hydrocarbons Downstream with permanent Basin and improving our net backs.

We are fortunate to have had to have significant flexibility to change the sales point for a large percentage of our recruiting gas volumes. And we are pleased to announce. We have recently entered into multiple new transportation and marketing agreements to optimize PR's pricing.

Slide 7 goes into a little more detail on the impact of the recent Downstream contracts. We have executed,

On the gas side, we have entered into multiple transportation and marketing agreements to sell. A significant portion of residue, natural gas to non-wovens along the Gulf Coast Central, Texas and East Texas.

These agreements should provide an incremental, 75 million cubic feet. A day of firm transport by year in 2025, which ramps to 450 million a day by year in 2028.

On the crew side, we've entered into multiple new crude oil, purchase agreements, providing improved, net backs, Diversified pricing and increasing exposure to the Gulf Coast markets.

We expect the net impact of these agreements to improve our gas. Net backs, by over 10 cents, per mcf and our crew. Net backs by over 50 cents per barrel.

the cumulative effect of all this effort by our team results, in a 50 million uplift to 2026 free, cash flow versus 2024,

We are excited about what we've done in the past 12 months on the marketing side and still retain significant flexibility for further optimization.

So I decide 8, we're excited to roll out a revised plan that incorporates our recent bolt-on that closed in June.

This plan reflects an increase to the original full year 2025 production, guidance by 3%, while lowering the capital budget by 2%.

The only other major update to point out is the impact of the 1, big beautiful, bill act. Overall we view the recent bills as a strong step towards further unlocking. The potential of us Shale the tax Provisions should further incentivize investment in domestic Shale production and meaningfully reduce permanent resources taxes over the coming years. We expect current cash taxes to be less than 5 million in 2025 and less than 50 million cumulatively in 2026 and 2027.

In addition, our industry will benefit from the reduction. In red tape associated with Federal drilling permits and federal lease sales the reduction in complexity of commingling federal and state production, and the further incentives for research and development.

It is our belief that these tax and Regulatory benefits far away. The modest impact. We expect to have on steel and other input costs.

I'll be concluding today's prepared remarks on slide 9 where we re-emphasize our value. Proposition for investors.

We are proud of the hard work of Team, put in and the strong returns that work has delivered for investors so far. We think it's important to point out that this peer leading to Total shareholder. Return has been driven by the growth in free cash flow per share rather than a rating of our multiple

We believe our balance sheet, our industry-leading cost structure and low, break evens position, the company to succeed, and create value for investors in any commodity price environment.

Thank you for tuning in today and I will turn it back to the operator for Q&A.

thank you, ladies and gentlemen, we will now begin the question and answer session, and if you wish to ask a question, please press star and 1 on your telephone keypad and wait for your name to be announced

once again, star N1, if you wish to ask a question,

If you wish to withdraw from the polling process, please press *2.

Please stand by while we compile the Q&A queue.

Thank you for waiting. We now have our first question and this comes from Scott hanold from RBC Capital markets. Your line is now open.

Thanks, good morning. Uh, I wouldn't mind a little bit of color on, um, your your recent production performance. Um, it looks like you've tilled what lesson

Half your your plan program for 2025 and and 2 q's outperformance and I guess we're all to my model was was pretty strong. I think there might have been some improved NGL yields in there, but can you can you just generally talk about like you know, maybe with the timing of sales or you know, the type of well, you're drawing because performance did feel, you know, pretty robust this quarter.

Been fortunate to have had a a pretty mild summer good weather so you know, really really good downtime statistics and then well results continue to impress. You know, the Delaware basin's kind of been the place to be and you know, good rock outperforms more often than not. So we've been a fortune position that we kind of keep keep hitting our numbers or beating the numbers quarter over quarter. And I think that's just a kind of representation of the good rock that we have.

Okay, thanks for that. And and this is my follow-up, you know, when when you sort of look at the landscape right now, I mean obviously feels a lot better than it did back in in the first quarter. But um you know, as you look going forward and in this relative outperformance um you know I guess this year you did step up your your production guidance, obviously related to the upper performance but on a relative basis is unchanged capex. And you know how how do you think about maybe letting some of that benefit acrew to produce or predict to the capital side versus the production side and and is it in part due to the commodity price Outlook? Or is it or is it more just? What's most efficient operationally?

Like we we did take down Standalone capex by $50 million to kind of this quarter uh as you can see in our updated guidance slides. I think a little bit less activity. I I think for us it's really going to be a judgment call depending on what we view the macro environment looking like over time. Like I definitely agree with you that the

Market. And the downside risk feels a little better today, but I'd say, there's still a tremendous amount of uncertainty, uh, with regards to commodity prices and what the overall economy does. So I I think for us, we're being patient. We're going to wait and see mode like well said, if you have a little bit of outperformance in Q2 that's going to show itself, I think very modestly in in our production numbers. But going forward, I think it's going to be a, really a judgment call. And, and we're going to react to What we feel like is the best real-time information, we have and, and make a call as we get there. But I, it'll be more commodity price, returns driven than efficiencies of operations. Our, I I say, within reason, I have all the comments in the world that our team can add activity drop activity without missing a beat. They they've shown it in the past. So we are there is value in you know keeping the same crews in the same rigs out there, but it's not something that we're scared to do, if it makes sense.

Okay, thanks for that, thanks.

Thank you. And the next question comes from John Freeman. From Raymond James. Your line is now open. Please go ahead.

Thank you, good morning. Uh, really like the steps that uh that we're taking with these marketing agreements. Uh, the outline on on on slide 7. Um, any help y'all can provide or just sort of how to think about the impact of, uh, to, to gpmt sort of unit costs, the next couple of years, in light of these agreements,

Yeah. Right now, there won't be a change to gpmt. Uh, based on those agreements we have some flexibility to do the different things with gas over time. That could change that, but we, we talked about that then. So right now I don't need to adjust GPM too.

And what we've shown on slide 7 that the 1010 for MC app and the 50 cents per barrel. That's that's net of all expected. Implied costs.

Okay, that's good to know. Um, and then on the same topic and we all highlighted that, you know, you've sort of the the Midstream strategy is is sort of evolved over time as you all become, you know, 1 of the largest, you know, both oil and gas producers in the permi and you talked about kind of doubling the size of the Midstream and the marketing team. And you know, we've we've recently seen some of the the large gmpp start moving more uh toward kind of like stepping up or expanding their kind of Midstream presence. Taking ownership of Midstream assets. Just as y'all think about just giving your side, the evolution of the company is that some is that a direction that y'all may have eventually?

Yeah, I think we've we definitely evaluated options, like that, as part of the, the deals we've announced in this cutie release, and some other ones that we've been working on. I think our view on that.

By and large has been the same with regards to Midstream and and kind of large scale. Infrastructure projects is that those really don't compete with the returns of our Upstream business and and and that's by a wide margin. I think we're seeing such attractive rates of returns at the Wellhead. That we think it's more prudent as capital allocators to focus our efforts on doing what we do best. This is Jillian, completing Wells and and making oil I think you know I I think there's projects are are good. I think probably better fit for more infrastructure like capital for us and we're able to get all of the benefits other than the equity investment kind of from the types of deals that we've done. And and I think that's probably the right base case going forward.

Great. Appreciate it, guys.

John.

From Neil, Mehta from Goldman Sachs, your line is now open.

Yeah, good morning will James team. I just would love you to unpack a little bit more about your downturn playbook, uh, which you alluded to in your remarks and and the release just uh, for for those of us on the line, talk about what your downturn strategy is to make sure that if we are going through a period of softer commodity

How do you ensure that you you come out of it stronger?

I mean, I think the kind of the kind of most important part of that is having a high quality business, and a strong balance sheet, you know, I think the the quality of our business shows itself on our

Leading low break, even to the permanent, and a balance sheet. That's, you know, been in a tip top position of strength for really, as long as we've been running this business. So I, I think if, if you're going to go through a downturn, it starts with asset quality and balance sheet. And then I think that's probably that's probably the auntie and then beyond that, you know, I think we've actually proven over time, that we really think the best opportunities for investing in enp can be periods of kind of Market panic, and dislocation, and like will said that can show itself in a lot of ways. And we did a lot of this albeit on a somewhat smaller scale and, and Q2, which is, you know, buying high quality assets at at lower than mid-cycle prices. It's buying back shares when you believe the pricing is truly dislocated. And, you know, I think it's, it's all it's doing all of that while making sure your balance sheet is

It is strong throughout, kind of from peak to trough. So, I think for us,

you know, that's something we've been talking about for the last couple years and we're actually excited about the opportunity to, you know, do some of those strategies and execute those pretty well in Q2, although is probably a shorter period at this location than a lot of the ones we've seen, you know,

That things could turn against at some point in the future, and, and we'll always be ready.

And then that's the follow up is just uh, there's been a lot of talk about m&a and some of the larger cap conference calls and just your perspective, certainly you guys have been a great uh consolidator of assets. Opportunistically with really smart bolt-ons and transformative m&a as well. Uh, but your perspective on, you know, whether you see PR as a consolidator or potentially, uh, a seller over time. Um,

Recognizing, it's a tricky question but it's a, I think an important 1.

No, it's that's that's a fair question and a good 1. I mean I think

Given our leading cost structure. We always, we've always said we view permeate resources as The Logical consolidator of Delaware Basin assets today. And frankly, we're really excited about that opportunity set and what's in front of us. Uh, you know, we talked about about our ground game efforts. Remain strong, we've continued to find larger scale Acquisitions. Like the Berea drop acquisition last year you know the Apache bolt on earlier this year and several hundred million dollar deals kind of in between. But we're I think we're confident too that that, that pipeline remains

Robust and will be able to find those types of attractive Acquisitions that make our business better. So I think, you know, we don't have a perfect Crystal Ball, but I'd say really excited about what the opportunity set looks like.

As a consolidator in the Delaware. But you know, to the flip side of your question, I I'd say we really do believe that our business has a tremendous amount of go forward potential on a standalone basis. You know, I think we believe that if we continue to execute that the levels are executing on today that we can continue to grow free cash flow for sure like we've done since Inception and you know, as a result of that drive, significant outperformance, kind of versus the modern market and and peers on a total shareholder return basis. Like like we designed the past and frankly like you can see on slide 9 but

But look ultimately our goal has always been to do what we believe creates the most long-term value for shareholders. Whether that be acquiring assets or desting them buying businesses or, or ultimately selling our business. And, you know, we've made every decision we've ever made.

Running this business as shareholders and together, our team owns over 6% of the outstanding equity.

A permanent resources stock, and you know as such, I think investors can rest assured. We’re going to continue to be super aligned with the entire investor base and do whatever we think will make the highest long-term returns and create the most value for investors.

Whichever path that may be. So I think really fortunate to be in the position of of kind of perfect alignment with investors and got to be focused on doing what makes the most sense over the long term?

Yeah, really good answer. Thank you so much.

Thanks.

Thank you. And the next question comes from. Kevin mchardy. From Pickering Energy Partners. Your line is now open.

From you guys, I realized maybe there's some moving pieces with the tariffs, but your quarterly capex was very good and you started off the call mentioning record drilling times. Any thoughts on the magnitude of efficiency or drilling improvements, you still see down the pipeline.

Um, look, I think we proved to ourselves this quarter that the, you know, the, the best Wells can be better than we've seen in the past, and I didn't even mention it, but we another stat that was close. Quarters is we drilled 5 of our fastest 10 Wells ever in Q2. So I we're starting to really push the envelope of the best Wells. You know. We need to keep making progress on the average Wells and on the worst Wells. Um,

But on the drilling side, you know, time directly correlates to the bottom line, you save about $100,000 every day you can cut. And so I I think we've proven to ourselves. There's a lot of stuff we can go get and we we've done it. Now on a handful of Wells, we just got to go do it on the average. Um, and yeah. You're right, like, Q2.

Our our well cost on a per foot basis is probably flat-ish to q1. I think some of that we drill a little bit shorter. Lateral links, you don't get quite the efficiencies, just the way the schedule shook out. But if you look at the kind of what we did on the Frac side, and the progress we've made on the kind of top quartile of drilling side, I think there's a lot of Tailwinds into the back half of the year.

Great. Sounds like there's still some improvement to come. And as a follow-up uh any change to how you're seeing the the Cadence of Turner lines this year and how much of your program do you have left to execute in the back half of the year? Thanks.

It's it's the same. It's the same numbers we put out there uh you know the 275 net of the 10 that we dropped from the original budget. Um I think we're slightly back half weighted but it it's the same as we last time we talked to y'all

Right. Thanks. Kevin

Thank you. And the next question comes from

uh, Phillip Jung word from BMO, your line is now open. Please go ahead.

On permanent Gas marketing. There's there's a number of projects in development to take gas to the Gulf Coast. But we're we're also seeing proposed projects to move volumes to the Rockies and even based on yesterday's news, the West Coast. Um, so while it's early on, on, on those options, just wondering how much you're considering these other outlets as a way to maximize net backs. And, and, and ultimately how much wahawk exposure would you look to maintain, uh, given there should be some tightening in the differential after 2026.

Yeah, I mean, I think the shortages were excited about all these projects, you know, I think we've been firm Believers for a long time that we need more pipes out of the Basin sooner. I think we're pretty excited about just the broader backdrop and I'd say the willingness of pipeliners to, to get out ahead of the kind of growth and gas, we've seen and expect to continue to see in the Parian. So we think this is a great thing for permanent resources. A great thing for the Permian Basin, and I think It ultimately be a great thing for the owners of these Pipelines.

We're not kind of as as you saw in our in my notes, like we're not just set on going to the Gulf Coast on the gas side. I think we're open and excited to explore different markets. I think for us we're really just trying to solve for what we think is going to be bring the best net back for every molecule of gas that we make. So I think we'll be constantly evaluating

kind of each and every 1 of these. I I I'd say,

In terms of how much waha do we expose, do we want long term? I think, historically, we said, you know, we used to sell about 20 to, 25%, of our gas outside of the Basin, and, you know, 75 to 80% in Basin and we'd like to reverse that over time. So, I think the right kind of kind of long-term answer for PR is probably 20 to 25%, of our gas sales at waha something like that. I think we like that flexibility and and kind of having, you know, the options continue to sell basic gas in the Basin over the long term because there's just a lot of interesting things that can happen in potential. Some potentially some exciting developments but I'd say that we kind of go from 2080 to 80/20 over time

Okay, and then, uh, congrats on the, on the Fitch upgrade. Um, sounds like the others are going to follow here shortly but, uh, besides the lower cost of capital, um, sticking with the marketing angle here. Uh, just how, how the IG rating at all, 3 agencies kind of benefits you in terms of these opportunities and, and could it open up any potential deals, that would otherwise not be available.

Yeah, I think investment grades I call them modify helpful relatives like regenerative to really attractive agreements with the ratings that we have.

But like, all these things—whether it's incrementally better terms on the midstream agreements, whether it's more flexibility to do longer-term debt, or whether it's more availability.

Those are all positive.

Works for us. Uh,

From a balance sheet perspective, and I'd say, we're glad Fitch recognized kind of the fact that our financial metrics and financial strategies are consistent with their Superior to a lot of our IG peers and we're focused on getting the rest of the way there.

Great, thanks.

Thanks, thank you. And um the next question comes from Zack Haram from JP Morgan. Your line is now open. Please go ahead.

Thanks for taking my questions. I wanted to follow up on on the marketing deals. We've seen a couple of your peers on some power deals in the Basin link the tower pricing is is that something you've had any negotiations on or that you're you're considering doing

No, I think.

We haven't seen any Invasion, gas sales deals that, we think we have confidence in can improve our net back relative to the other opportunities and we haven't seen anything interesting on the power side, kind of in the areas where I think we need the power of the most. I think most of what we've seen on. The power side has been in Texas where we have really good grid connectivity and frankly, really good kind of our our pricing going forward. I think the area where we've needed more power connectivity has continued to be in New Mexico, and we haven't seen a lot of projects there to date, but our, our certainly open to to them in Texas, New Mexico, wherever they come and we'll continue

Need to evaluate them as they come across our desk.

Thanks. Uh, and then my follow-ups just on your hedge book, you added a little bit during the quarter, can you just update us on on how you're thinking about hedging on a go forward basis?

Yeah, no change on kind of overall hedge strategy, which is roughly 30%. 20%, 10% hedge, 1 2 and 3 years out.

We were there on 25, have good progress on 26. I think what you've seen from us is like, we're flexible in how we get there. We're not going to force ourselves into those equations, but we try to be nimble and lean in when you have, what seems like pretty clear dislocations. Like, we saw in June with our balance sheet, where it is. Today, we're fortunate. We can, like I said, be really patient. Like, you know, I think we we're going to try to hedge more if we think prices are higher. And, and we could be comfortable hedging less. If if there's fewer opportunities to lock in what we view as subjective prices. So I I think we're we're building flexibility as the quality of our business grows and, you know, I think being opportunistic in late June and locking in kind of prices during that period of positive volatility was a great opportunity for us

Makes sense. Thanks James. Thanks Scott.

Thank you. And the next question comes from John Abbott from Wolfe research. Your line is now open. Please go ahead.

Hey, thank you very much for taking our questions. I want to go back to slide 7 in the marketing agreements and

You know, appreciate the free cash flow. Guidance on 2026.

But the kind, it looks like the amount if the the capacity increases out to 2028. So I guess just to help us sort of triangulate things that you sort of. Look at the 2028, you look at sort of strip pricing.

How would you describe the potential impact to free cash flow beyond that 2026, over these agreements?

Kind of different markets and strip pricing all the way out to 2028. So I I I think our the answer we're comfortable giving is the existing contracts. We, we expect to see kind of Greater benefit than what's outlined in in 2026. And I think we're continuing to find new opportunities to optimize. If you, if you look at those charts in the middle of slide 7, like, you know, we're we're kind of 2 surge contracted on the gas side, using current volumes and about half contracted on the crude side. So I, I think for us, kind of combination of the existing contracts that are shown on slide 7 and kind of future optimization, we expect to do. I think you should expect to see that number, you know, go up as we get Beyond 2026.

Appreciate it. And then just following up, you did close on the Delaware acquisition during the quarter. I mean, the assets are in half in-house. Could you maybe speak to a little bit more about the opportunities in terms of savings and optimization now that you have the Assets in hand?

Yes, so we closed 6 weeks ago, kind of took over operation shortly thereafter. I I'd say this is right in our backyard. So this is, you know, from an integration perspective. I'd say it was kind of integrated within a week. Um,

I think that, what's unique to this deal in particular is

what our land team will do with the assets. If you think about kind of, when we rolled that deal out, it was very unique in that, it came with a lot of really good operated units and a lot of non-op under PR, but it also had some kind of really good high quality more scattered acreage that our team will go to work on right away and we have, you know, we are in the middle of discussing multiple trades right now that kind of get us into either core up in areas where, you know, we'd like to core up or or get us into new units that we otherwise wouldn't be in. So I

Not a lot of like super specifics and I I don't have a look back on the numbers yet because we're, you know, 4 weeks in from, from operating or something like that. But,

We've had some quick wins on the people and water, disposal side. And I'm expecting some big wins to come on the land side.

Appreciate it. Thank you very much for taking our questions.

Thank you.

Thank you. And uh, the next question comes from John and it's from Texas Capitol. Your line is now open. Please go ahead.

Hey. Good morning all and thanks for taking my questions. For my first 1. I assume the march in for error is extremely narrow to drill top decile, Wells, let alone, 5 of 10 fastest and 1 quarter. Can you remind us of what has to go right to be able to do this? What, and what did you do to have it go? Right 5 times in 1 quarter and then just how far the average is to these high water marks.

Yeah, so I to to drill a top desk, how well you've got to have no unplanned trips.

You have to basically have no npt or or or near zero npt

And then we need to be rotating when we're drilling most of the time, you know? So basically no sliding no MPT and no unplanned trips. Um

I I think you're right for all 3 of those to go. Well, it's an outlier that's not the average, but but we are I'd say those best Wells are probably

I mean, the 2 that we drilled this quarter were called, um, you know, 5 and a half and 6 days, something like that and our average is probably closer to 10 and a half or 11. So,

not quite half of the average, but but close to it, uh,

And so I look for us I think this is super exciting. Like our our drilling team has

not just 1 well but a you know a handful or almost 2. Handfuls of Wells that have shown. This is doable and now they just got to go see if they can make that the norm. And, and if we do, it's it's it's very meaningful. You know, 5 or 6 days, call it 5 or 600,000 on a gross basis per well, like, that's, you know, coming up on almost 10% of our will cost. We could cut out.

I don't think that's something y'all should expect to happen in second half this year, but I do think that is a, a long-term goal for us to try to go get

Terrific. For my follow-up and and the release you highlight chemical and power optimization projects as drivers of maintaining low eloe during the quarter. Can you provide some more color around those drivers and more specifically what you are doing on the power side?

Hard to try to both increase runtime and cut costs and that's a balance. Because as you increase run time, it typically comes with more Capital to get there.

Um,

One project we've done involves two of these. We call them microgrids, which is basically kind of behind-the-meter power where we'll set kind of...

larger scale, power generation behind the meter and interconnect it to a bunch of different locations. Uh, it has a bunch of benefits 1, you know?

Field hand to our who are out servicing that equipment or spend less time driving to multiple locations. They just go to 1 spot. Um, there's also some kind of economies of scale in larger scale, power generation and better run time. So that that's been a kind of the kind of wins. We look for where you get both better, runtime and lower cost. Um, we've done 2 of those today. They both been extremely successful. I think power costs are down 30% on both of them.

We're kind of working through now. How many of these opportunities do we have? You know, as you can imagine if you're if you have a high concentration of wells, in in 1 area, it makes a lot of sense because the capital for the power lines is less and if the wells are more spread out, it starts to get skinnier on kind of your all-in return on investment. So I think it's just other creative ways that we are always trying to get better. Um the production team takes a lot of pride in what they do and and and this quarter they they really demonstrate it with some cool projects.

Great colors. Thanks guys.

Thank you.

Thank you. And the next question comes from Leo, Mariani, from Rock Capital, we are lines now open. Please go ahead.

Um, sort of drove that but I heard you, right? It sounds like the expectation is that those well costs will come down. Um, in the second half of the year. Uh, I just wanted to clarify that and then, additionally, can you talk about uh, how much of that you think can be driven by, you know, kind of sticky efficiencies? And is there a cost component as well, that you may benefit from

Yeah. Look, I think the

My expectation are, you're going to see an efficiency Step Up. Um, we've

we've demonstrated the ability to do it and I have no reason to believe that we can't replicate what we did in Q2 and in the back half of the year um with the volatility we've seen and kind of depressed oil prices, I'd say service costs in general are

Coming down a little bit. It's not, you know, there wasn't a ton of room to give but where we've had it, we've gotten some, and we've made some, you know, vendor changes and are always trying to figure out kind of the best way to optimize.

Kind of the balance of efficiencies and and cost per unit on our side. And and then there's a little offset in in casing cost, you know, obviously casing costs are up just due to tariffs. And, you know, I'd say you give a little bit back there. But yeah. Net, net. I'd expect cost per foot to be down in the back half of the year.

Okay, appreciate that. Um and I guess just from a you know high level perspective. Obviously you talked about kind of the macro if I if I read you your tone right. Sounds like you know maybe there's a little bit of of caution just given the the current landscape. Should people generally expect you guys to try to kind of hold oil flattish for the foreseeable future? And this kind of Uncertain macro landscape and just kind of remain laser focused on reducing costs.

Yeah, I think that's probably a good generalization. I I'd say we we've we've kind of come out of several years of, you know, very pronounced growth and has said time time. And again, this year, that it does not feel like it's the right kind of Market to return to, what's been if you combine organic, and inorganic, you know, several years of double digit production growth, you know, I think just with the amount of uncertainty and the supply side, and the demand side between today, we don't think that makes sense. So I think that they're kind of forecast for the near term and that could be, you know, months or that could be quarters until we kind of have more more confidence in, in returning to growth. I think kind of kind of flattish to to kind of low single digit. Growth is the right expectation and that's what this year's looked like.

Okay, thanks.

Thank you. And the next question comes from Noah hungus from Bank of America. Your line is now open. Please go ahead.

Morning. I will James and team, uh, to start off. I was hoping uh, if you guys could expand on the comments around uh the federal lands and the co-mingling uh that's kind of been opened up. What is that mean for perion resources? Is that kind of allow you to assess what was potentially stranded acreage or extended dsus?

No, it doesn't do that. It's really what it does. It allows us to build kind of central tank batteries.

In New Mexico like we use like like we currently do in Texas like think if you've got 2 units that back up to each other and 1 Had State and 1 had Federal acreage.

prior to that, we would have to build basically completely separate batteries, which is

For us to waste a capital and I think generally just not the most efficient way to, to run our business and, and with the new um, ability to come and go in New Mexico, we can build 1 battery and just meet her the wells like we do in Texas. So a little bit of Capital Savings really I just say the world's a better place, you know, smaller footprint, less places to drive to in a little bit of Capital Savings. So we're excited about. I think it's a a really Common Sense thing that needed to happen for a long time.

And we're happy that it finally got done.

That makes sense. And then, um, on the updated guidance, uh, Capital increased by the 20,000, um, that I think you guys had previously flagged, but, uh, the till count, uh, working interest and lateral footage was unchanged. So is the increase in the capex from, uh, is it from just, uh, moving Capital into, uh, higher cost? Part of the Delaware? Or is it, uh, or is, is there other spending involved there?

Well, that was a work in progress. Well, is that we took over from Apache that you know.

a little bit of capital flow through to us kind of between

Effective dating closing or or just post-closing.

Thanks guys.

Thank you.

once again, as a reminder for those who want to ask a question, please press star and 1 on your telephone keypad star and 1, if you wish to ask a question,

And the next question comes from Paul Diamond from City. Your line is now open. Please go ahead.

Uh thank you. Good morning y'all. Thanks for taking a call. It's going to quickly touch on the balance sheet, you're all sitting at about 450 million in cash on our numbers that it creates pretty solidly over the course of the second half of the year. Can you remind us what you think is the right number to carry there? Or is there a plus or minus or

What's the right number? You want to hold on the balance sheet?

Having. Yeah, this liquidity I think we, we talked about last quarter, we went into Q2 with the best balance sheet we've ever had. We executed on the downturn Playbook as we described and we sit here with half a billion dollars of of cash on the balance sheet and 1 times leverage. So I think

Kind of our approach to to balance sheet and and just make you making sure we have Firepower for when we go into, these downturns is a huge part of how we think we can deliver shareholder return over time.

Got it makes sense and then just 1 quick. Follow-up on the ground game. Cadence. You guys have done a pretty good job over the first half of the year. Should we accept those or expect? Those numbers to remain relatively stable, you know thousand plus acreage per quarter? Or is there any reason to think the opportunity set is you know, growing or shrinking

Yeah. I mean, I

We we feel awesome.

Recent Apache, New Mexico acquisition really helps open up some kind of new fairways and new windows to pursue that. I think probably more, I’d expect more ground game from here. I think Q2 is probably a little bit lighter than it would have otherwise been with all the volatility. You know, I just think kind of with what happened at the beginning of the quarter from an oil price perspective, it just takes a little time for both seller and buyer expectations to reset. So, I think, you know, all in, I’d say we’d expect to do more ground game on the back half from here.

Understood. Appreciate the clarity. I'll get back.

Thank you. And we have no further questions that came through. At this time, I'll now hand the call over back to will hickey for closing remarks. Please go ahead, sir.

Thanks John. Uh, this was an outstanding quarter for the pr team. Not only did we continue our operational track record in the field, but also quickly executed on our downturn Playbook, which we believe will drive real value for shareholders,

Given our high quality asset base in Fortress balance sheet, we believe we can continue this execution and value creation. Going forward in any commodity price environment. Thanks to everyone for joining the call today and following the Permian resources story.

Thank you. This concludes our conference call for today. Thank you all for participating. You may now. Disconnect